Australian home construction costs surge by 30 per cent in five years

The cost to build a home in Australia has risen almost 30 per cent in five years, with the price of some construction materials going up by as much as 70 per cent, according to a new report.

Prices have risen most steeply in Queensland and northern Australia, where it now costs 44 per cent more to build a home than it did in 2021, the report from the Insurance Council of Australia found.

Between 2022 and 2026, insurers received 400,000 claims to repair or rebuild homes damaged in declared events, costing $11.3 billion.

Materials most needed after a natural disaster have gone up in cost the most, with roof tiles up more than 70 per cent — more than three times the rate of inflation — and windows, plasterboard and concrete prices increasing upwards of 37 per cent.

Insurance Council Australia (ICA) chief executive Andrew Hall said inflation was driving up costs, and people's premiums with it.

"In states like Queensland, where quite often it's severe storms that impact a home, those things that need replacing immediately are the things that are costing the most, that all goes into the calculation when we're looking at the cost of an insurance premium," he said.

Meanwhile, as extreme weather events become more frequent and severe, Australia is repairing nearly as many homes as it is building new ones.

In 2025, declared events damaged 145,392 homes. Nationally, 172,657 new homes were built.

In the past five years, in Queensland alone, insurers have repaired or replaced more than 240,000 homes.

"These are homes that are already existing which means we're competing with the same sector that's trying to deliver new homes to meet the housing challenges," Mr Hall said.

It's set up a "double whammy" where insurers vie with builders for materials and trades, he said.

"Not only are we trying to meet the affordability and accessibility challenge, we're at the same time competing for the same builders and materials to repair existing housing stock."

The report recommends Australia builds more resilient homes, and stop homes being built in high-risk areas.

$230,000 in repairs after cyclone

Cyclone Jasper turned Kathy Pitt's house into a skeleton.

It took $160,000 from her superannuation and about $70,000 government grants to get the uninsured owner her Holloways Beach home back, and there's still work to be done.

"I suppose I didn't believe but I just had to pay it off in some way and lucky I had that money," she said.

"I put it off … and then you put it off a bit longer and it costs even more."

Ms Pitt said being in Far North Queensland, there are fewer trades to choose from so it was hard to get more than one quote, and materials and labour was more expensive.

Even with the cost of repairs without insurance, Ms Pitt said premiums are "too prohibitive" for her to be insured after being quoted about $12,000.

Far North Queensland builder Matt Hart said it was difficult, as a business owner, to manage the rising cost of materials, which is beyond his control.

"Unfortunately, the cost of materials is just something we have to pass on to the consumer and the client," he said.

"I can't do anything about materials, but I can do something about the hourly rate and labour."

'Future-proofed' homes key

"Future-proofed" homes would stop resources for new buildings being diverted for repairs, Paula Jarzabkowski, Professor in Strategic Management at the University of Queensland said.

Instead of rebuilding "like for like" repairs need to make a home safer and more likely to withstand severe weather, she added.

"At a time when we should be building more homes and we know that, we're having to go backwards and rebuild existing homes," Professor Jarzabkowski said.

"If we weren't rebuilding that 150,000 perhaps we could have put those resources into building the housing stock for tomorrow.

"We need to build that housing stock in a way that is future-proofed. Let's not build tomorrow's buyback today."